U.S.-China Decoupling Gains Momentum --- Officials have a small window to stabilize economic ties before the political calendar starts driving events.

"Treasury Secretary Janet Yellen is determined to convince Beijing that Washington doesn't want wide-scale economic decoupling from China.

If she and other like-minded administration officials succeed in stabilizing Sino-U.S. ties over the next half year -- before presidential elections in the U.S. and Taiwan -- that would remove a major risk factor for markets in 2024, to say nothing of the world at large. But a partial decoupling of the two economies has strong momentum of its own now. And China's unexpected economic weakness this year -- along with the U.S. economy's surprising resilience -- may embolden hawks in Washington.

Students of international relations will be familiar with the concept of the security dilemma, whereby actions meant to boost security -- for example, raising military spending -- sometimes damage a nation's security over the long run, because rivals conclude it is preparing for war and take countermeasures.

An economic twist on the concept might go something like this: The world's two largest economies, both increasingly worried that armed conflict is inevitable at some point, begin pulling apart their long-intertwined technological and trade supply chains. Over time, much weaker economic and interpersonal links hand more and more influence to security hawks in both capitals. Meanwhile the economic impacts of disentanglement damage growth in both nations, in different ways, and fuel populist politics. That makes managing unexpected crises more difficult.

Yellen's painstaking efforts to reassure are probably aimed, at least in part, at avoiding precisely such a scenario. In comments to CBS on Sunday, Yellen told viewers, "My purpose is to make sure that we don't engage in a series of unintended escalatory actions that will be harmful to our overall economic relationship."

Beijing is sending some obvious signals of its own: The announcement of plans for new export restrictions on minerals gallium and germanium, both important for tech and defense applications, was a clear sign that if the U.S. continues strangling China's chip sector, it won't be cost free.

One problem is that while the Chinese and American economies are deeply entangled, the impact of the fraying relationship on supply chains has been very significant. And as Apple's moves in India show, "de-risking" is now being driven by major corporate actors and not just politicians.

Imports from China as a percentage of total U.S. goods imports fell below 12% in March. That was, excluding March 2020 at the onset of the pandemic, the lowest level since 2005, according to figures from data provider CEIC -- and down from over 20% as recently as 2018. Over the same period, U.S. imports from Taiwan and Vietnam have roughly doubled their share to about 6% of the total. Some of these shifts may represent Chinese goods being "repackaged" in third-party countries, but even so the 2018 and 2019 tariffs, uncertainty over future tech-sector restrictions and the general downturn in relations have already had a large effect.

Another reason for pessimism is that while the White House is eager to avoid a full breakdown in relations, the U.S. has a clear upper hand economically right now -- and that may tempt hawkish administration members to keep pushing for additional restrictions, like the ones on investment and artificial-intelligence chips reportedly under consideration.

China's post-Covid recovery is shaping up to be far weaker than expected, and while it does have clear points of economic leverage -- for example, plane orders for Boeing and key points along the battery and solar supply chains -- the U.S. and its allies' dominance of the entire chip sector limits its options for retaliation in semiconductors.

Even the mooted controls on Chinese gallium and germanium may be something of a red herring. Analysts at the Center for Strategic and International Studies, a leading Washington security think tank, conclude that China's gallium restrictions may be "mostly symbolic," in part because there are other significant suppliers and processors, including core U.S. allies like Japan. 

China may succeed in raising costs for U.S. users by forcing transshipments of such goods, but in general restricting trade flows of commoditized items is very difficult -- just look at what has happened recently with Russian oil, or U.S. efforts to keep low-tech semiconductors out of Russia.

The optimistic view of the weekend's visit is that more direct contacts between high-level U.S. and Chinese officials is, in and of itself, an essential lubricant to the relationship. But ultimately, it may take some incident in the South China Sea or Taiwan Strait to focus minds in both capitals on the real downsides of a further deterioration in relations." [1]

1. U.S.-China Decoupling Gains Momentum --- Officials have a small window to stabilize economic ties before the political calendar starts driving events. Taplin, Nathaniel. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 11 July 2023: B.12.

JAV ir Kinijos atsiejimas įgauna pagreitį --- Pareigūnai turi nedidelį langą stabilizuoti ekonominius ryšius, kol politinis kalendorius nepradės greitinti įvykius

   „Iždo sekretorė Janet Yellen yra pasiryžusi įtikinti Pekiną, kad Vašingtonas nenori plataus masto ekonomikos atsiejimo nuo Kinijos.

 

     Jei jai ir kitiems panašiai mąstantiems administracijos pareigūnams pavyks stabilizuoti Kinijos ir JAV ryšius per ateinantį pusmetį – prieš prezidento rinkimus JAV ir Taivane – tai pašalintų pagrindinį rizikos veiksnį šioms rinkoms 2024 m., jau nekalbant apie visame pasaulyje. Tačiau dalinis dviejų ekonomikų atsiejimas dabar turi stiprų pagreitį. O netikėtas Kinijos ekonomikos silpnumas šiais metais, kartu su stebinančiu JAV ekonomikos atsparumu, gali paskatinti vanagus Vašingtone.

 

     Tarptautinių santykių studentai bus susipažinę su saugumo dilemos samprata, kai saugumui didinti skirti veiksmai – pavyzdžiui, karinių išlaidų didinimas – kartais ilgainiui kenkia šalies saugumui, nes konkurentai daro išvadą, kad ji ruošiasi karui ir imasi atsakomųjų priemonių.

 

     Ekonominis šios koncepcijos posūkis gali būti maždaug toks: dvi didžiausios pasaulio ekonomikos, kurios abi vis labiau nerimauja, kad ginkluotas konfliktas tam tikru momentu yra neišvengiamas, pradeda atitraukti savo ilgai susipynusias technologines ir prekybos tiekimo grandines. Laikui bėgant, daug silpnesni ekonominiai ir tarpasmeniniai ryšiai suteikia vis daugiau įtakos saugumo vanagams abiejose sostinėse. Tuo tarpu ekonominis atsiskyrimo poveikis įvairiais būdais kenkia abiejų šalių augimui ir skatina populistinę politiką. Tai apsunkina netikėtų krizių valdymą.

 

     Yellen kruopščiomis pastangomis nuraminti, tikriausiai, bent iš dalies, siekiama išvengti būtent tokio scenarijaus. Komentaruose CBS sekmadienį Yellen sakė žiūrovams: „Mano tikslas yra užtikrinti, kad mes nesiimtume žingsnelių į daugybę nenumatytų eskaluojančių veiksmų, kurie pakenks mūsų bendriems ekonominiams santykiams“.

 

     Pekinas siunčia keletą akivaizdžių savo signalų: paskelbimas apie planus dėl naujų eksporto apribojimų mineralams galio ir germanio, kurie yra svarbūs technologijų ir gynybos reikmėms, buvo aiškus ženklas, kad jei JAV ir toliau smaugs Kinijos lustų sektorių, tai to nepadarys nemokamai.

 

     Viena iš problemų yra ta, kad nors Kinijos ir Amerikos ekonomikos yra giliai įsipainiojusios, niūrių santykių poveikis tiekimo grandinėms buvo labai didelis. Ir kaip rodo „Apple“ veiksmai Indijoje, „rizikos mažinimą“ dabar skatina ne tik politikai, bet ir pagrindiniai įmonių veikėjai.

 

     Importo iš Kinijos procentas viso JAV prekių importo kovą sumažėjo žemiau 12%. Remiantis duomenų teikėjo CEIC duomenimis, tai buvo žemiausias lygis nuo 2005 m., neįskaitant 2020 m. kovo mėn., kai prasidėjo pandemija, ir sumažėjo nuo daugiau, nei 20 % 2018 m. Per tą patį laikotarpį JAV importas iš Taivano ir Vietnamo apytiksliai padvigubino savo dalį iki maždaug 6 proc. Kai kurie iš šių pokyčių gali reikšti, kad Kinijos prekės yra „perpakuojamos“ trečiųjų šalių aikštelėse, tačiau net ir tokiu atveju 2018 ir 2019 m. tarifai, netikrumas dėl būsimų technologijų sektoriaus apribojimų ir bendras santykių nuosmukis jau padarė didelį poveikį.

 

     Kita pesimizmo priežastis yra ta, kad nors Baltieji rūmai trokšta išvengti visiško santykių žlugimo, JAV šiuo metu turi aiškią ekonominę persvarą, o tai gali gundyti senolius administracijos narius ir toliau siekti papildomų apribojimų, tokių, kaip dabar. Pranešama, kad svarstomos investicijos ir papildomi dirbtinio intelekto lustai, kaip sankcijų objektai.

 

     Kinijos atsigavimas po COVID gali būti daug silpnesnis, nei tikėtasi, ir nors ji turi aiškių ekonominio sverto taškų – pavyzdžiui, lėktuvų užsakymai „Boeing“ ir pagrindiniai baterijų bei saulės energijos tiekimo grandinių taškai – JAV ir jos sąjungininkų dominavimas visame lustų sektoriuje riboja jos galimybes imtis atsakomųjų veiksmų puslaidininkių srityje.

 

     Netgi ginčytini kiniško galio ir germanio valdikliai gali būti tarsi raudonoji silkė. Pagrindinio Vašingtono saugumo ekspertų centro Strateginių ir tarptautinių studijų centro analitikai daro išvadą, kad Kinijos galio apribojimai gali būti „daugiausia simboliniai“, iš dalies dėl to, kad yra kitų svarbių tiekėjų ir perdirbėjų, įskaitant pagrindines JAV sąjungininkes, tokias, kaip Japonija.

 

     Kinijai gali pasisekti padidinti JAV vartotojų išlaidas, priverstinai perkraunant tokias prekes, tačiau apskritai apriboti masiškai parduodamų prekių prekybos srautus yra labai sunku – pažiūrėkite, kas pastaruoju metu atsitiko su Rusijos nafta arba JAV pastangomis išlaikyti žemų technologijų puslaidininkius, kad tie nepatektų kariams iš Rusijos.

 

     Optimistiškas savaitgalio vizito vaizdas yra toks, kad tiesioginiai aukšto lygio JAV ir Kinijos pareigūnų ryšiai savaime yra esminis santykių tepalas. Tačiau, galiausiai, gali prireikti incidento Pietų Kinijos jūroje arba Taivano sąsiauryje, kad abiejų sostinių protai būtų sutelkti į tikruosius tolesnio santykių pablogėjimo trūkumus." [1]

 

Europos Sąjunga visiškai rimtai nelinkusi nutraukti ekonominius ryšius su Kinija. Tai suteiktų konkurencinį pranašumą Europos Sąjungos verslams prieš Amerikos verslus. Tokia perspektyva galėtų disciplinuoti vanagus Vašingtone.

1. U.S.-China Decoupling Gains Momentum --- Officials have a small window to stabilize economic ties before the political calendar starts driving events. Taplin, Nathaniel. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 11 July 2023: B.12.

 

Artificial Intelligence (AI): The Cloud May Not Be Ready for the Boom in AI.

"Many companies say the cloud is their go-to when it comes to training and running large AI applications -- but today, only a small portion of existing cloud infrastructure is actually set up to support that. The rest is not.

Now cloud providers, including Amazon Web Services, Microsoft Azure and Google Cloud are under pressure to change that calculus to meet the computing demands of a major AI boom -- and as other hardware providers see a potential opening.

"There's a pretty big imbalance between demand and supply at the moment," said Chetan Kapoor, director of product management at Amazon Web Services' Elastic Compute Cloud division.

Most generative AI models today are trained and run in the cloud. These models, designed to generate original text and analysis, can be anywhere from 10 times to a 100 times bigger than older AI models, said Ziad Asghar, senior vice president of product management at Qualcomm Technologies, adding that the number of use cases as well as the number of users are also exploding.

"There is insatiable demand," for running large language models right now, including in industry sectors like manufacturing and finance, said Nidhi Chappell, general manager of Azure AI Infrastructure.

It is putting more pressure than ever on a limited amount of computing capacity that relies on an even more limited number of specialized chips, such as graphic chips, or GPUs, from Nvidia. Companies like Johnson & Johnson, Visa, Chevron and others all said they anticipate using cloud providers for generative AI-related use cases.

But much of the infrastructure wasn't built for running such large and complex systems. Cloud sold itself as a convenient replacement for on-premise servers that could easily scale up and down capacity with a pay-as-you-go pricing model. Much of today's cloud footprint consists of servers designed to run multiple workloads at the same time that leverage general-purpose CPU chips.

A minority of it, according to analysts, runs on chips optimized for AI, such as GPUs and servers designed to function in collaborative clusters to support bigger workloads, including large AI models. GPUs are better for AI since they can handle many computations at once, whereas CPUs handle fewer computations simultaneously.

At AWS, one cluster can contain up to 20,000 GPUs. AI-optimized infrastructure is a small percentage of the company's overall cloud footprint, said Kapoor, but it is growing at a much faster rate. He said the company plans to deploy multiple AI-optimized server clusters over the next 12 months.

Microsoft Azure and Google Cloud Platform said they are similarly working to make AI infrastructure a greater part of their overall fleets. However, Microsoft's Chappell said that that doesn't mean the company is necessarily moving away from the shared server -- general purpose computing -- which is still valuable for companies.

Other hardware providers have an opportunity to make a play here, said Lee Sustar, principal analyst at tech research and advisory firm Forrester, covering public cloud computing for the enterprise.

Dell Technologies expects that high cloud costs, linked to heavy use -- including training models -- could push some companies to consider on-premises deployments. The computer maker has a server designed for that use.

"The existing economic models of primarily the public cloud environment weren't really optimized for the kind of demand and activity level that we're going to see as people move into these AI systems," Dell's Global Chief Technology Officer John Roese said.

On premises, companies could save on costs like networking and data storage, Roese said.

Cloud providers said they have several offerings available at different costs and that in the long term, on-premises deployments could end up costing more because enterprises would have to make huge investments when they want to upgrade hardware.

Qualcomm said that in some cases it might be cheaper and faster for companies to run models on individual devices, taking some pressure off the cloud. The company is currently working to equip devices with the ability to run larger and larger models.

And Hewlett Packard Enterprise is rolling out its own public cloud service, powered by a supercomputer, that will be available to enterprises looking to train generative AI models in the second half of 2023. Like some of the newer cloud infrastructure, it has the advantage of being purposely built for large-scale AI use cases, said Justin Hotard, executive vice president and general manager of High Performance Computing, AI & Labs." [1]

1. Artificial Intelligence: The Cloud May Not Be Ready for the Boom in AI. Bousquette, Isabelle. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 11 July 2023: B.4.